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Saturday March 12, 2011

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Season Five. "Burn The Boats: Brands That Risked and Won."

Airs Saturday, March 12th and Thursday, March 17th, 2011.

This week, The Age of Persuasion looks at the concept of "Risk." We tell the stories of the marketers who took the biggest risks, and reaped the greatest rewards - including how one of the best loved movies of all time only survived because the producer risked his career on it, a board game that dared break the conventions of the category, a watch company that risked all and saved the Swiss watch making industry in the process, a CEO who made a decision that was so unpopular even his board of directors bet against him, and the remarkable story of a entrepreneur who risked everything to start a company, then risked a gamble in Vegas to save it.

They are the true warriors who "burned the boats" so there was no turning back - and then made history.

Listen to this episode as streaming audio (runs 26:30) Or subscribe to the podcasts by RSS or by iTunes.

Click through for more visual elements from this episode.

Casablanca is one of the most revered and famous movies of all time.

But the only reason it got made was because of the passion of producer Hal Wallis. He had to fight the studio, he didn't get the director he wanted, he didn't get the lead actress he hoped for, the script didn't quite work, and even deep into the shooting, he didn't have an ending.

But Hal Wallis believed in the picture, and risked his reputation to save it.

The rest, as they say, is Hollywood history:

In the early 1980s, the Japanese overtook the lower to mid-priced watch category, and displaced Switzerland as the watch capital of the world. So when two big Swiss watch companies were to be liquidated, a man named Nicolas Hayek was called in to oversee the wind up. While doing that, he wondered if he could, in fact, build a better watch and compete with the Japanese. So he took a huge risk, designed a watch unlike the world had ever seen before, and beat the Japanese at their own game. He called his watches "Swatch":

Many think the word "Swatch" is a contraction of the words "Swiss" and "watch" - but it actually stands for "second watch." Hayek wanted Swatch watches to be a secondary fashion item, and encouraged consumers to buy several, to match clothes, seasons or moods.

One of the most successful companies in North America is FedEx. Started in the early 70s by entrepreneur Fred Smith, it was a revolutionary idea that Smith had written up in a college economics paper. His professor gave him a "C" because it wasn't "feasible."

Wrong.

So Smith raised capital, took a risk and began Federal Express:

Getting FedEx off the ground was an expensive proposition. At one point, he was having trouble meeting payroll, so he took the second biggest risk of his career. He turned his corporate jet around one night and headed for Las Vegas, where he put his money on the blackjack table, and won $27,000. It was just enough to get over the cash crunch. The rest is delivery history. FedEx went on to create a new category, and it also inspired some outstanding advertising:

One other interesting thing about FedEx: Take a good look at their logo. In particular, look at the space between the "E" and the "X" - and you'll discover an arrow. That is a nice piece of design - suggesting that FedEx is all about movement and forward momentum. Exactly what a delivery company wants you to feel:

Another risk-taker was also named Smith - Darwin E. Smith, to be precise. He was the CEO of the Kimberly-Clark company. Shy, meek and humble, his exterior hid a razor sharp mind and a courageous heart. Not long into his tenure, he decided to sell Kimberly-Clark's paper mills. It was a radical decision, because those mills were the main business of the company. Instead, Smith wanted to move the company from the industrial world into the consumer world, and make paper products for the general public.

The stock market called his plan crazy, the business press criticized him, and even his board of directors called it the "gutsiest move a CEO has ever made."

It also threw his company into the fire of competition with the two largest paper companies in the world; Scott Paper and the mighty Proctor & Gamble. One of Kimberly-Clark's most successful products was Kleenex, which started life as a table napkin:

Kleenex was later marketed as a tissue, and went on to claim over 50% of the market. Smith also took another risk and pushed his company into the disposable diaper business, another highly competitive category. But by 1984, Smith's company captured 50% of the market with their Huggies brand:

Twenty-five years after that monumental risk of selling the paper mills, Kimberly-Clark beat Proctor & Gamble in six of eight product categories, would own Scott Paper outright, and had $7 billion in revenues.

Darwin E. Smith may have burned the boats, but he, and other warriors like him, took a risk and made history.